Saudi Arabia’s central bank is preparing tougher rules for insurance companies as part of a drive to create a smaller number of stronger market players operating in the country, two people with direct knowledge of the matter told Reuters.
A new supervisory framework will be introduced in the coming months that will force insurers to boost capital significantly as well as improve internal risk controls, said the sources, who declined to be named due to the sensitivity of the matter.
The moves are aimed at triggering consolidation in the insurance industry and forcing weaker companies to merge with stronger ones, industry analysts said.
The Saudi insurance sector has come under pressure as the economy has slipped into recession this year, with health insurance suffering in particular as expatriates have left the kingdom, and hospital costs have risen, the sources said.
